Jewelry group Signet could securitize its whole loan portfolio to raise cash to ward off a proposed buyout by two private equity firms. The London-based company owns U.K. retailers H. Samuel and Ernest Jones and is being eyed by private equity firms Apax Partners and Kohlberg Kravis Roberts, who are considering launching a £2 billion ($3.79 billion) takeover bid.
According to published reports, Apax and KKR want to take the company private to revamp it and improve operating efficiencies. But Investec Asset Management, which owns a 2.5% stake in Signet, believes Signet can make these improvements by raising cash through a securitization and reducing inventory while remaining a public company. "We think there's a value that's going unrecognized by investors," said David Lynch, a fund manager. Signet's loan book of U.S. customer receivables is around £407 million.
Given Signet's securitization potential, Lynch would like to see bids that are considerably higher than the 132p per share said to have been offered by KKR and Apax. Lynch said Signet is familiar with the market having done privately placed securitizations before.
Tim Jackson, a spokesman at Signet, said the company's board has stated that it has not yet received an official bid from any parties. He declined to comment on whether another securitization will be done.